Group Finance Companies and “Mixed” Holding Companies: The New Income Test Introduced by Legislative Decree No. 148/2026

Article 5 of Legislative Decree No. 148 of 7 August 2026 (the so-called “Omnibus Decree”) amended the definition of “entities treated as equivalent to non-financial holding companies” contained in Article 162-bis, paragraph 1, letter c) of the Italian Tax Code (TUIR).

The amendment affects the tax classification of so-called captive finance companies, i.e. companies that carry out financial activities exclusively in the interest of their group. Circular No. 15/2026 issued by Federholding provided the first operational guidance on the matter.

Two distinct categories

Non-financial holding companies (i.e. holding companies in the strict sense) hold equity investments in non-financial companies on a predominant basis. The assessment is carried out through an asset-based test: the value of equity investments classified as fixed assets, together with related fixed-asset loans, is compared with total assets; if the ratio exceeds 50%, the company qualifies as a non-financial holding company.

The same rules also apply to “equivalent entities”, namely companies belonging to a corporate group which, although they do not hold equity investments, carry out financial activities referred to in Article 3, paragraph 2, of Ministerial Decree No. 53/2015 (such as granting loans, issuing guarantees, etc.) exclusively in the interest of other group companies. This is the typical case of a group finance company performing centralised treasury functions.

The new income-based test

Before the amendment, in order to qualify as an “equivalent entity”, it was sufficient to carry out the above-mentioned captive activities to any extent. Legislative Decree No. 148/2026 has now introduced the wording “exclusively or predominantly” and added paragraph 3-bis to Article 162-bis of the TUIR, according to which predominance exists where, based on the latest approved financial statements, revenues deriving from such activities exceed 50% of total revenues and income.

This is therefore an income-based test, operating on the income statement rather than on the balance sheet. However, the provision merely refers in general terms to “revenues and other overall income”, without identifying the specific financial statement items relevant for the purposes of the denominator.

Federholding’s Circular suggests, as an interpretative approach, comparing the numerator—consisting of income from captive activities (typically intra-group interest income, item C.16)—with a denominator limited to items A.1, C.15 and C.16 of the income statement, rather than with all income statement revenues. This interpretation reflects the position of an industry association and has not yet been endorsed by any official guidance issued by the Italian Revenue Agency; moreover, it is not the only interpretation that may be compatible with the literal wording of the provision.

Sequence of tests and risk of distortion

From an operational perspective, the asset-based test must first be carried out in order to determine whether the company qualifies as a non-financial holding company. Only if this test produces a negative outcome should the income-based test be performed, to assess whether the company may nevertheless qualify as an equivalent entity.

The critical issue highlighted by Federholding concerns companies carrying out mixed activities, such as real estate holding companies that also provide financing to their subsidiaries. In such cases, the predominant weight of real estate assets may cause the company to fail the asset-based test, while the same company may pass the income-based test if interest income from loans granted to subsidiaries exceeds rental income.

This situation is facilitated by the discretionary nature of dividends, which may not be distributed in a given financial year, and by the fact that interest on short-term loans, although excluded from the asset-based test, is fully included in the income-based test.

The risk identified by Federholding is that entities which are substantially unrelated to the world of group finance companies may nevertheless be classified as such solely because of their income composition in a single financial year.

Federholding’s interpretative adjustment

To avoid this distortion, the Circular suggests, again as an interpretative solution, excluding from the income-based test income already linked to the balance-sheet components considered in the asset-based test, such as interest on medium- and long-term loans granted to subsidiaries.

Under this approach, the income-based test would only include income not already taken into account in the first test.

Operational implications

The classification is not permanent but must be reassessed each year based on the financial statements approved from time to time: a company may qualify as an equivalent entity in one year and not qualify in the following year.

For companies carrying out mixed activities, an annual systematic monitoring process is therefore advisable, to be performed when preparing the financial statements and the tax return, with particular attention to years in which no dividends are distributed or in which there is increased reliance on short-term intra-group financing.

The new rules apply from the tax period following the one ongoing as of 31 December 2025 (i.e. from 2026 for calendar-year taxpayers) and therefore do not affect the 2026 REDDITI tax return.

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